Expand the beef industry to get more value from the Ogallala?

With the Ogallala aquifer declining, there’s the inevitable question of how best to use the water remaining. A recent study from Texas A&M suggests one answer: expand the cattle production and processing industries and rely on bringing in more “imported” grain and the “virtual” water it brings to the region.

The study’s conclusion is based on a comprehensive analysis of the water usage and the economic value of the beef industry in the Southern Plains Region stretching from the northern border of Kansas to just north of Midland-Odessa, TX. (Download a pdf of the full study).

Southern Ogallala Region estimated direct and indirect water use by beef operations, 1975–2010.

Credit Texas A&M AgriLife Extension Service

Beef production uses Ogallala aquifer water both directly and indirectly. Direct uses are for watering, cleaning, feed processing and maintenance, primarily at feedlots. These uses account for just 1% of the total agricultural use of the aquifer. Indirect uses are for irrigating the grain, silage and hay used for feed. This usage is 27.6% of the agricultural total, after adjusting for the fact that only 64% of feed used comes locally from crops grown with water from the Ogallala aquifer. Beef production’s share of all the agricultural uses of the aquifer consequently totals 28.6%. In 2010 that share was estimated to be about 3,094,000 acre feet of water or just over one trillion gallons.

Southern Ogallala Region estimated water use by livestock and irrigated crop production in comparison to beef industry water use, 2010. Overall, agriculture accounts for more than 90 percent of the aquifer water use in the region each year.

Credit Texas A&M AgriLife Extension Service

In return, beef production generated about $17.5 billion in economic impact in 2010, including direct, indirect and induced effects. When divided by the amount of Ogallala aquifer water used, the result is about $5,654 in economic impact per acre-foot or about 1.7 cents per gallon. The study notes this value is “relatively high compared to other industries”. These calculations do not include the follow-on economic impact of the beef processing industry, which adds over $12.3 billion in economic impact while using comparatively little aquifer water.

Based on this analysis, the study concludes that “any expansion of the beef industry in the Southern Ogallala Region will have minimal impact on water resources while increasing economic activity and employment opportunities”. To the degree that the expansion would require decreasing irrigated crop acreage to provide the water needed, this would be advantageous given the higher overall economic value of using the water for localized beef production than crop production alone. More importantly, any significant expansion would be predicated on importing grain from other areas since the region is already grain deficit. In this way, the required indirect water usage would be in the form of “virtual water” brought in with the imported grain. The resulting economic activity generated by the expanded beef industry could then help offset the economic losses from the long-term shift from irrigated to dryland crop production across the region.

Report cover. See second paragraph above for link to download a pdf of the full report.

Credit Texas A&M AgriLife Extension Service

Beyond giving details of this water usage and economic value analysis, the study also provides a succinct overview of the history, structure and economics of the beef production and processing industry across the Southern Ogallala region. Among the interesting factoids in the study:

a typical 30,000 head feedlot requires 29 full-time employees

1.5 million semi-loads are generated in the region each year to ship feeder cattle, feed and fed cattle

the region has been “grain deficit” since the late 1970’s due to the growth of the cattle feeding industry, along with growth in the swine, dairy and ethanol industries.